OECD Warns Global Steel Overcapacity Could Reach 721 Million Tonnes by 2027

Global steel excess capacity is projected to rise sharply to 721 million metric tonnes by 2027, up from 601 million tonnes in 2024, raising fresh concerns over profitability and the steel industry’s decarbonization efforts, according to the OECD. Persistent overcapacity is putting pressure on global steel prices, squeezing producer margins and making it harder for companies to finance investments in low-emission steelmaking technologies. Between 2025 and 2027, around 25.8 million tonnes of blast furnace-basic oxygen furnace (BF-BOF) capacity is expected to close. However, approximately 62.1 million tonnes of new BF-BOF capacity is planned, mainly in China and India. The OECD also highlighted continued capacity expansion in ASEAN linked to Chinese investments. Green steel investments are also facing challenges. Low-emission projects representing about 15.5 million tonnes of capacity had been suspended or postponed as of Q2 2025 due to excess capacity, high energy costs and regulatory uncertainty. The OECD stressed that decarbonization policies should be supported by effective retirement of older, emission-intensive steelmaking capacity to prevent new investments from simply adding to global oversupply.